Delivering the social fund at a local level

Issue 229 (August 2012)

CPAG published a new report at the end of June,1looking at the opportunities and risks around the localisation of the social fund in London. Kate Bell, London campaign co-ordinator at CPAG, explains how some local authorities are planning for the abolition of the discretionary social fund next year, and what ideas are forming as to what should take its place.

We know that at present the social fund provides an essential, if imperfect, source of support to many families on a low income. From 2013, local authorities will have responsibility for meeting the needs for one-off items of expenditure for benefit claimants through community care grants, and for emergency financial support for all local residents through crisis loans.

The money formerly spent in local areas on delivering this support will be devolved to a local level, but will not be ringfenced; rather, the purposes of this funding will be set out in a settlement letter. This localisation does offer opportunities for local authorities to provide a more responsive and integrated system to residents. But there are also key risks involved, and a fear that local authorities will have insufficient funds to provide a decent level of support.

One key concern is that levels of demand for the emergency support provided by the social fund are likely to rise sharply in the coming years. Demand for crisis loans has risen significantly since 2006, at the same time as a telephone claiming system was introduced. We do not have a clear analysis of what has driven this increase. DWP data suggests that crisis loans given for alignment payments and living expenses have gone up broadly in line with the increase in claims for jobseeker’s allowance that accompanied the recession, and it argues that an increase in applications by young people is driving this rise (while supplying no data to support this) stating that, ‘We know that demand is largely being driven by young people under 25. Even when taking into account the relatively high levels of youth unemployment during the recessional period, actual demand outstrips forecasts.’2However, other services such as food banks have also seen a sharp rise in levels of demand.3 What’s more, there are a number of factors which may mean that need rises still further:

  • the impact of overall benefit cuts – around 55 per cent of cuts to financial support have not yet hit families;
  • the specific impact of the local housing allowance cap and overall benefit cap on on high rent areas – for example, it is estimated that 54 per cent of families who will be hit by the overall benefit cap live within London;
  • changes to disability benefits, which will see some residents losing access to contributory employment and support allowance, and some losing support when the personal independence payment replaces disability living allowance for adults. Around 30 per cent of total community care grant expenditure and 20 per cent of expenditure on crisis loans go to disabled people;
  • the introduction of universal credit in October 2013. While we hope for a smooth transfer to the new system of universal credit, any glitches in delivery may have an impact on demand for the social fund.

Local authorities are therefore likely to meet a rising case load, but their plans for how to do this remain at very different stages. We spoke to five local authorities in London during the course of the research for this report and around 25 local authority representatives attended the launch. While some had basically established what their new scheme would look like, many were at the very early stages of planning.

Among those authorities we spoke to, we saw evidence of some promising approaches emerging. These included:

  • No big bang. A number of local authorities were considering putting in place an interim scheme, enabling them to assess the level of need within their local area before finalising the delivery model. At present, many authorities feel that the level of data they are receiving from the DWP about current social fund use will be insufficient to assess levels of neither need nor demand. If interim schemes are established, we think it will be important to monitor outcomes carefully, and ensure that the interim scheme does not become by default a permanent option.
  • Integrated assessment processes. Local authorities run a number of discretionary payment schemes including, for example, discretionary housing payments and section 17 payments for children in need. There may be access to other funds, such as those from charitable foundations, within the borough. It seems sensible for residents to be assessed for their eligibility for this type of support at one time, rather than having to pass through multiple assessment procedures. Some authorities were therefore looking at joint working across housing, revenue and benefits, and adult and children’s social services. We are not suggesting that the different forms of payment are integrated into one fund; they have clear and distinct purposes. But we do think there may be options to ‘hide the wiring’ from the residents’ perspective, so that wherever they enter the system, whether through housing, social services or through applying for a social fund-type payment, their eligibility for the full range of support is determined.
  • Maintenance of some form of cash scheme. Some local authorities saw a dilemma between the desirability of making cash payments to avoid stigma and the potential for savings from the bulk procurement of goods to be provided in kind. We think that councils will have to think very carefully about how to avoid stigma if they do go down the route of procuring goods in kind. Even if they do choose in-kind support for the majority of provision, we think they will need to retain some type of provision to make cash payments in the case of emergencies, most notably when people are threatened with their fuel being disconnected and for travel costs.
  • Clear referral routes to other help and support. There is a real potential for local authorities to improve existing arrangements to deliver a more integrated scheme that not only meets immediate need, but also enables residents to access further help and support. Some local authorities were working closely with credit unions and advice agencies to make sure that people were referred on to other forms of credit, and to advice agencies which could help them access the benefits they are entitled to and perhaps deal with problem debts.

However, it was also clear that there are a number of real risks involved for local authorities and residents in delivery of the new schemes.

These include:

  • Cross-borough issues and postcode lotteries. A key issue emerged around local connection rules. Charities involved in the roundtable we held as part of the research expressed fears that if applicants to local schemes are asked to prove a local connection, families who have had to move, such as those who have experienced domestic violence or those leaving prison, may find themselves with no way of accessing support. However, authorities emphasised the need for an integrated approach across London. No one borough wants to end up being the only one that applies no local connection rules. At the launch event, most authorities who had thought about this suggested they would be applying local residency tests – but there were no clear answers as to what would happen when somebody moves. This is an area that CPAG will be lobbying further on as part of this work.
  • Dealing with emergencies. It is not yet clear how local authorities would deal with a large-scale emergency (eg, riots or floods) which significantly increased the demand for emergency support.
  • Out-of-hours provision.The level of money devoted under the ‘new burdens’ scheme, by which funding for services devolved from central to local government is determined, will limit the level of service which local authorities will be able to provide at the assessment and application stage, although there should be benefits from an integrated assessment process across council departments. But this funding is unlikely to cover the costs of an out-of-hours service, potentially leaving residents with no source of support in an emergency.

CPAG will be monitoring the establishment of local schemes in London. For more information about CPAG’s London work or this report please contact Kate Bell on kbell@cpag.org.uk.

 


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